Ergen cools on DirecTV

By Chris Forrester

May 9, 2014

Dish Network founder Charlie Ergen poured some calming words on the fever that’s currently surrounding the rumoured AT&T bid for Dish’s rival, DirecTV. Ergen told analysts during his Q1 results conference call on May 8th that he would not be making any sort of counter-bid for DirecTV. “DirecTV would be too frothy for us, for our board to look at, at [these] kind of prices.”

He admitted that a merger between AT&T and DirecTV made sense in view of the potential synergies that would flow. “I haven’t looked at it from an AT&T perspective in detail,” he said. “But there certainly is economic rationale for an AT&T, DirecTV or an acquisition of DirecTV by AT&T because I think it would be accretive, very high price, materially higher than even DirecTV is selling for today. That could be an accretive transaction for them. And if the reports are true that DirecTV has hired bankers, to perhaps shock the company, AT&T would be – and some other companies – would be crazy not to look at DirecTV. It’s a really good company, and it’s got really good financial metrics. It probably makes little less sense strategically because they don’t buy long-term strategic – they buy you [for] some strategy. Certainly from a financial point, it makes a lot of sense, and they’d be crazy not to look at it.”

Ergen expanded his thoughts saying: “Washington will make rules and regulations and merger approvals and things and decisions that will affect us, and they’ll pick winners and losers. And the good news is that the administration and the FCC have talked a lot about competition and being in favor of competition. And that would be good for Dish because we like to compete. The negatives would be that there are some headwinds there. The Time Warner, Comcast merger is unprecedented concentration of power, particularly in broadband, and that would certainly raise concerns. And some of the comments on net neutrality where there might be a charge for a fast lane would totally change the dynamics of the industry.”

Meanwhile Ergen is reported to have turned his attention to T-Mobile US, contemplating a bid if its deal with Sprint runs into trouble.